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View of Senior Management Critical to Whistle-Blowers, Research Finds

The way that employees feel about their company, its leadership and its culture has a significant impact on their willingness to report apparent misconduct, a new study says.

A December 2010 report from the Ethics Resource Center, a nonprofit organization based in Arlington, Va., concludes that “those with positive attitudes about the company are more likely to help it succeed by reporting when rules are broken.”

Blowing the Whistle on Workplace Misconduct challenges the belief that whistle-blowers are most likely to claim misconduct by company officials when a repressive or secretive culture makes employees feel that their leaders won’t improve without being embarrassed publicly or without facing regulatory, civil or criminal penalties.

In fact, a report released by the Ethics Resource Center earlier in 2010 stated that making major improvements to U.S. corporate ethical behavior will require tougher effort from government regulators and enforcers than has been present in recent years—particularly in the high-stakes financial services industry. Partnerships between government and private-sector compliance officials must be part of the solution, said that report, which was written by a group of senior ethics professionals brought together by the center.

But the latest report focuses on who reports misconduct, and why. “By every indicator,” the report says, “employees are more likely to report misconduct when management sends positive messages about ethics.”

In another somewhat surprising finding, the report states that company hotlines for reporting ethical lapses are not very popular.

“When employees report misconduct, the company hotline is one of the last places they go. Although hotlines provide confidentiality or even anonymity for employees nervous about tattling on a co-worker, only three of 100 reports about internal misconduct come to company hotlines,” the report finds.

The study defines whistle-blowing broadly and says that “there are more whistleblowers than one might expect. In 2009, more than six out of 10 employees said they reported workplace misconduct when they saw it.”

Don’t Look the Other Way

“Employees, the people who know best the work environment, the attitudes of their peers, whether management means what it says about ethics and whether people are breaking the rules, tell [the center] they will blow the whistle on bosses as well as co-workers,” the report says. “More than three-quarters surveyed … say they would not ‘look the other way’ if their employer did something questionable.”

The report notes that “some companies have linked ethical conduct to performance reviews to make clear that good behavior is a job expectation.”

More than 40 percent of survey respondents say they almost lost their job or were denied a raise in retaliation for reporting misconduct. The most common form of retaliation cited by employees was being excluded from decisions and work activity, cited by 62 percent of those polled, followed by being given the cold shoulder by other employees (60 percent of respondents) and being abused verbally by a manager (55 percent).

“In strong cultures—with a tone at the top that makes clear that ethics matter, where supervisors aggressively reinforce the ethics message, and employees and managers are truly held accountable to higher standards—more employees report [misconduct] to their direct supervisor,” the report says.

In other organizations, the report continues, employees prefer going to senior management, most likely because they aren’t confident that lower-level managers are committed to strong ethics or because they fear retaliation.

The report notes that women are more likely to report misconduct than men and that line managers are more likely than individual contributors to report ethical lapses.

“Across the board, culture is critical,” the report states. “When we succeed at building ethical cultures with strong training programs and committed management, reporting of misconduct goes up and wrongdoing goes down. Attitude matters. If we want to boost the odds of ethical conduct, attitude and culture are places for focus.”

Steve Bates is manager of online editorial content for SHRM. He can be reached at steve.bates@shrm.org.